Siam Winery appointed Archie Gracie as its Supply Chain Director three years ago, and since then he has set about transforming the company’s supply chain to support the company’s goal of doubling its revenues and profits, while becoming an international wine retailer through expansion into both Asian and global markets. The niche wine-maker has faced off a variety of challenges to reach this point, from government legislation to geographical stresses – Business Review Asia finds out how the company has been able to shrug these aside and develop a strong plan for the future.
“We need to have the capabilities in terms of innovation,” he says, “And also to build capabilities in terms of driving our performance so that we can grow without over-stretching the business – in our production and supply chain capabilities and in our supplier’s capabilities. It’s very much an end to end continuous improvement journey in order to have the right capabilities to support the growth.”
As South East Asia’s largest winery, the company has an annual production capacity of 0 million litres, which amounts to roughly a million units on a daily basis. Siam Winery’s operations cover every aspect of winemaking – from growing and harvesting, through to ageing, bottling, and distribution. It has two warehouses in Bangkok, giving it a total storage area of 7,600 square meters, which are supported by its own logistics and distribution system covering its entire supply chain.
These assets are crucial to the company’s future strategy, as Gracie explains: “In our strategy to the market we want to offer our customers a full portfolio of choice - we want wines from entry level to real wine connoisseurs. Our strategy is to be international purveyors of wine across all of Asia.”
Siam Winery’s award-winning grapes are grown at three vineyards across the country. These consist of: Hua Hin Hills Vineyard, home to Monsoon Valley Wine, where its Shiraz, Chenin Blanc and Colombard grape varietals are grown; Tab Kwang, north of Bangkok; and Chang Mai Hills in the far north of Thailand. Alongside its own wines, the company also imports globally-recognised wine brands and produces a range of non-alcoholic beverages.
Gracie explains that the company is driving continuous improvement across its operations: “We have embraced world class manufacturing tools and techniques such as kaizen and lean, and we are setting a balanced scorecard of KPIs which are driving performance evaluation across the business.
“These are customer service, quality, safety – what I call effectiveness and efficiency. It is also about people metrics – both in terms of happiness and capabilities. We have asset care which is looking after and maintaining the performance of our mainly German and European assets. We are benchmarking our performance with leaders in the market, against people like Diageo, Coca Cola, Heineken, and Pepsi, so we understand who is best in class in the beverages segment.”
Supply chain transformation
Ensuring that the company’s supply chain is fit for purpose is understandably central to expanding into Asian and international markets. But, as Gracie points out, its transformation is also an opportunity to drive innovation and value across the board. He says: “We had a tax change which put a 25 percent increase in our duties. We had to find ways to reduce our costs to try and mitigate that increase. We didn’t want to – as our competitors do – pass on that tax to the consumer. We managed to sustain growth whereas many other categories and competitors lost volume and lost profit and revenue as a result.”
Siam Winery is ensuring that its supply chain retains this resilience while driving innovation in the long term like never before. It is achieving this using a multifaceted approach which consists of implementing new technology, reworking its forecasting approach, and ensuring that its operations adhere to strict national and international standards.
“That’s a key part of our current strategy – how we cope with double the volume in a way that drives efficiency and reduces complexity,” Gracie explains. “That includes a lot of working with the world-class partners like Krones and Gebo Cermex in terms of our packaging processes, and with some of our wine partners to benchmark against Australian Vintage (McGuigan wines), E&J Gallo, and Accolade who are leaders in the field. We can learn a lot from how their businesses – which are much larger in scale – perform versus ours.
“Driving efficiencies in the conversion process is a key part but the prime driver is looking at alternative materials. Moving from cork closures to roll on screw caps has been a big way of mitigating cost increases.”
A crucial part of the company’s supply chain evolution has focused on ensuring that its operations are performed in-line with international standards, which is why it has endeavoured to work in accordance with ISO 9000 and ISO 14000 guidelines. Keen to take advantage of the snowballing importance of data, Siam Winery implemented SAP systems last year in order to take a detailed look at its historical data.
The niche varieties that Siam Winery produces are well sought-after by connoisseurs across the world. By making these brands more accessible both regionally and globally, the company is putting Thailand’s viticulture sector on the map. While alcohol advertising is practically forbidden in Thailand, it is certainly not on the continent, which is why the company is dedicating serious resources to the creation of an international e-commerce website.
Gracie adds: “If you really want to have an impact in other Asian markets – particularly China – you need to be online to reach the customer. As we build our export business I see that the opportunities for ebusiness have high potential.”
Due to climatic conditions, Thai viticulture by necessity requires year-round attention and intensive labour processes. While Gracie has cannot yet control the weather, he can certainly influence how the company’s daily operations impact the local environment and community. Which is why he has a long-term goal to make all operations carbon neutral and is currently engaging with local officials to build a tri-generation boiler. These recent efforts add to the company’s years of work raising money for local schools through a number of initiatives.
The work of Archie Gracie and others at Siam Winery is an example for all businesses that have been told that they are demanding the impossible. Its founder was told that good wine could never be produced in Thailand – 20 years on, and with Asia and the wider world firmly in its sights, the company is still proving that the impossible can be achieved with the right strategy.